Trump threatens “ruination” of Canada amid NAFTA talks

U.S.-Canada trade talks look set to drag on as President Donald Trump ratchets up pressure by threatening auto tariffs he says would mean the “ruination” of the Canadian economy.

According to Bloomberg News, Trump – speaking Friday in North Dakota – said he believes Canada is ripping off the U.S. and repeated that, if a deal can’t be reached, he’ll apply a 20 per cent tariff on cars. “In some countries, including Canada, a tax on cars would be the ruination of the country. That’s how big it is. The ruination of the country,” he said. “NAFTA has been the worst trade deal ever.”

He made the comments as talks to revise the North American Free Trade Agreement continued in Washington, with U.S. Trade Representative Robert Lighthizer meeting his Canadian counterpart, Chrystia Freeland, for the third consecutive day. The countries have struck a positive tone, but remain at loggerheads over a handful of issues.

“We’re really in a continuous negotiation phase and we’re all working very hard,” Freeland told Bloomberg News Friday after meeting Lighthizer. She didn’t say when they would next meet; he’s due to be in Europe on Monday. “In a trade negotiation, nothing is done until everything is done,” Freeland said.

The Trump administration gave notice Aug. 31 of intent to sign a trade deal with Mexico in the next 90 days, which could include Canada “if it’s willing.” The next deadline comes up at the end of the month, when the U.S. would need to publish text of an agreement in order to sign it before Mexico’s president-elect takes office Dec. 1.

White House Economic Adviser Larry Kudlow, speaking Friday on Fox Business, said Canada will have to make dairy concessions for a deal. “The word that continues to block the deal is m-i-l-k,” Kudlow said. “The United States would rather have a trade deal with Canada, but it has to be a good deal.”

Speaking earlier in the day to reporters, Trump said talks with Canada are moving along. “We’ll see what happens,” he said. “Look, everybody wants to deal with us. We’ve never had a president that dealt.”

Canadian Prime Minister Justin Trudeau identified two “red lines” this week. One is keeping some kind of anti-dumping panels, currently provided by NAFTA’s Chapter 19. The other is to preserve an exemption for Canadian cultural industries.

“We are engaged in an exercise to try to save the best of NAFTA and that’s kind of unfortunate, but everybody knows what we are facing in the White House these days,” John Manley, president of the Business Council of Canada and a former federal cabinet minister, told Bloomberg News by phone on Friday. “Being steady, workmanlike, consistent, not rising to any of the bait that’s being thrown at us by the president is the right thing to do.”

In any deal, Canada needs assurances that it will be spared by U.S. national security investigations — leading to tariffs so far on steel and aluminum, and possibly on autos — and should dig in on Chapter 19, Manley said. “We do need Chapter 19.”

Canadian officials have opened the door to making dairy concessions, but would rather see the existing 1994 NAFTA pact die than be forced to sign a bad deal to update it. Trump has regularly threatened auto tariffs if no deal can be reached.